Israel says it is facing a new strategic threat from the Palestinian-ruled Gaza Strip, because of the smuggling of improved weapons across the Egyptian border. Israel believes it is headed for another round of conflict with the Islamic militant group, Hamas, which now heads the Palestinian Authority.

The Israeli army says Palestinian militants have smuggled some Katyusha rockets into the Gaza Strip, potentially threatening towns well inside Israel. Military sources say the rockets have been smuggled into Gaza through tunnels in the Rafah area, running under the border with Egypt. Israel abandoned Rafah, known as a corridor for weapons smuggling, when it pulled out of Gaza in August.

The army believes that the Islamic militant group, Hamas, which assumed control of the Palestinian Authority a month ago, is preparing for a new round of conflict with Israel. Hamas seeks Israel's destruction.

"We have to understand that any territory that we give to the Hamas will be used against us," said Mr. Netanyahu.

Netanyahu believes the smuggling of Katyusha rockets is the result of Israel relinquishing control of the volatile border between Gaza and Egypt. He says Israel's retreat will help Hamas to implement its agenda of jihad, or holy war.

"And, if we give them territory, they will expand into that territory, and flood it with missiles and other weapons," he added.

Katyusha rockets have a longer range than the homemade Palestinian Qassam rockets fired frequently at Israel. The Katyushas could hit strategic facilities like a power station in the nearby Israeli city of Ashkelon.

Israeli generals have warned that, in the wake of a new Katyusha threat, the army is drawing up a contingency plan to reoccupy parts of Gaza.